Ford spins its self-driving business into a $4bn separate company
Automotive giant Ford has decided its self-driving efforts are important enough to warrant a separate company with $4 billion of investment.
Ford Autonomous Vehicles LLC will be based in Detroit, Michigan and will be tasked with developing the company’s self-driving technology.
Jim Hackett, President and CEO of Ford, explained the decision:
“Ford has made tremendous progress across the self-driving value chain – from technology development to business model innovation to user experience.
Now is the right time to consolidate our autonomous driving platform into one team to best position the business for the opportunities ahead.”
With car ownership set to decline in favour of renting automated vehicles as the technology becomes more widely available, the firm is preparing to launch its own autonomous fleet. The new company will also be responsible for this network of vehicles.
It’s hard to put a timeline on when autonomous vehicles will become mainstream. The actual car technology is progressing rapidly but it’s looking set to be the supporting legislation and roadside infrastructure will hold it up.
Ford’s new company will be supported by a total of $4 billion in funding over the next five years, including $1 billion that Ford is investing into Pittsburgh-based Argo AI.
Raj Nair, Ford EVP, Global Product Development, and CTO, commented:
“Working together with Argo AI gives Ford a distinct competitive advantage at the intersection of the automotive and technology industries.
This open collaboration is unlike any other partnership – allowing us to benefit from combining the speed of a startup with Ford’s strengths in scaling technology, systems integration, and vehicle design.”
How much Argo AI will impact Ford Autonomous Vehicles LLC is yet to be seen, but the new company will hold Ford’s ownership stake in it.
The announcement of Ford’s autonomous spin-off firm arrives hot on the heels (or tyres, perhaps?) of the company’s disappointing financial results.
Ford lowered its full-year earnings forecast due to slumping sales and trade tariffs in China, and its struggling business in Europe. The company also expects its plans to revamp its business could lead to pre-tax charges of up to $11 billion over the next three to five years.
What are your thoughts on Ford’s decision? Let us know in the comments.
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